200Q Flashcards by official kj

An agent’s license can be suspended or revoked by?

A. not meeting annual sales quota

B. replacing an existing insurance policy with a new one

C. writing primarily controlled business

D. issuing a binding receipt

writing primarily controlled business = An agent’s license can be suspended or revoked by writing primarily controlled business.

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What is the purpose of the Insurance Guaranty Fund Association?

A. Enforces Florida’s insurance regulations

B. Protects policyowners against insolvent insurance companies

C. Underwrites high-risk insurance applicants

D. Establishes underwriting guidelines for admitted insurers

B. Protects policyowners against insolvent insurance companies

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T is an employee covered under a Group Life policy. If T’s employment is terminated, the conversion privilege gives T the right to convert?

A. to an individual policy with a higher amount of coverage

B. to an individual policy, only if the employer pays the premiums

C. to an individual policy, only by providing evidence of insurability

D.to an individual policy upon employment termination

D. to an individual policy upon employment termination

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An applicant who pays the initial premium at the time of application is typically given a(n)

A. certified receipt

B. official receipt

C. binding receipt

D. conditional receipt

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Which action could result in a hearing being ordered by the Department of Financial Services?

A. Performing insurance transactions without a license

B. Conducting insurance business in this state while being a resident of another

C. Representing a foreign insurer

D. Sharing commissions with another licensed agent

A. Performing insurance transactions without a license

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Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract

A.only when requested by the policyowner

B. twice each year

C.once each month

D. once each year

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W gave W’s age as 50 when W purchased a Life policy. At the time of W’s death seven years later, the company discovered W’s true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?

A. There would be no death proceeds paid out by the insurer

B. The insurer is only obligated to refund all premiums paid

C. The proceeds would be reduced based on whatever the premium would have been if purchased at age 59

D. The policy’s full death benefit would be paid, due to the expiration of the incontestable period

C. The proceeds would be reduced based on whatever the premium would have been if purchased at age 59

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An example of an unfair claims settlement practice is

A. making it mandatory that proof of loss be provided for each claim

B. paying a claim in a timely matter

C. requiring a time limit for submitting a claim

D. turning down a claim without providing the basis of denial

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What are adjustable rates for life policy loans in Florida based on?

A. National average of other states’ variable rate

B. Prime lending rate

C. 90-day treasury bill rate

D. Moody’s corporate bond index

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Which of the following activities will NOT result in the suspension of an agent’s license?

A. Replacing an insurance policy from one insurer to another based on misrepresentation

B. Making malicious and false statements about an insurer

C. Misrepresenting any fact about an insurance policy

D. Working for a foreign insurer

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What is Florida’s definition of Life insurance replacement?

A. A transaction in which a new policy is bought and an old policy is terminated

B. A transaction in which a policyowner reinstates a lapsed policy

C. A transaction in which group life coverage is converted to an individual policy

D. A transaction in which coverage on an existing policy is increased

A. A transaction in which a new policy is bought and an old policy is terminated

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An example of false advertising would be

A. An insurer advertising in an insurance trade journal

B. Paid testimonials from celebrity endorsements

C. An insurer exaggerating its dividends in a magazine advertisement

D. An agent spending more than $25 on marketing gifts for a client

C. An insurer exaggerating its dividends in a magazine advertisement

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Which of the following acts is an agent NOT authorized to do on behalf of an insurer?

A. Complete insurance applications

B. Accept premiums from policyowners

C. Ask health related questions

D. Authorize claim payments

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Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

A. A statement made by the agent that NAIC guidelines have been met during the replacement process

B. A copy of the agent’s insurance license

C. A list of all policies the agent has replaced in the last 3 years

D. Notice to existing and replacing insurers of intention to replace

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Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?

A. Policy summary

B. Buyer’s guide

C. Illustration

D. Conditional receipt

B. Buyer’s guide

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Which of the following employer tasks does a Professional Employer Organization normally handle?

A. Hiring staff

B. Administration tasks

C. Marketing strategies

D. Setting sales quotas

B. Administration tasks

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Which of the following employees may NOT be excluded from a group life plan?

A. Full-time employees before the probationary period

B. Seasonal workers

C. Part-time employees

D. Full-time employees after the probationary period

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Which of the following is a standard provision of the conversion privileges in a Group Life policy?

A. Group Life coverage can only be converted if the employer pays for the individual policy

B. Group Life coverage can only be converted by providing evidence of insurability

C. Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis

D. Group Life coverage can normally be converted to an individual policy within 6 months

C. Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis

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Which of the following situations are NOT subject to Florida life insurance laws?

A. Insurance companies’ life policy replacement requirements

B. Insurance companies’ setting of life insurance policy rates

C. Insurance companies’ day-to-day operations

D. Insurance companies’ guidelines for paying a life insurance claim

C. Insurance companies’ day-to-day operations

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As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

A. Coercion

B. Defamation

C. Rebating

D. Misrepresentation

A. Coercion

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Which of the following situations does NOT apply to the Florida Replacement Rule?

A. An existing policy is reissued with a reduction in cash value

B. A new policy is issued while an existing one is surrendered

C. An existing policyholder purchases an additional policy from the same insurer

D. An existing policy is subject to extensive borrowing

C. An existing policyholder purchases an additional policy from the same insurer

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Convincing a prospective insured to buy an insurance policy based on exaggerations is called

A. twisting

B. intimidation

C. rebating

D. misrepresentation

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During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of

A. misrepresentation

B. twisting

C. replacement

D. sliding

A. misrepresentation

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If an agent combines premiums collected with their personal funds, they have engaged in:

A. rebating

B. commingling

C. defamation

D. twisting

B. commingling

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How can an agent-in-charge have more than one location? A. By keeping all locations within a close proximity B. Only if the agent-in-charge is present when insurance activity occurs C. Only if the locations are in Florida D. An agent-in-charge can only have one location

B. Only if the agent-in-charge is present when insurance activity occurs

Which of the following professional organizations has its code of ethics incorporated into Florida law? A.Financial Industry Regulatory Agency (FINRA) B.National Association of Insurance Commissioners (NAIC) C. The American College of Life Insurance D. National Association of Insurance and Financial Advisors (NAIFA)

D. National Association of Insurance and Financial Advisors (NAIFA)

A life insurance policyowner may sell their policy to a(n) _____ in order to receive a percentage of the policy's face value. A. insurer B. viator agent C. broker D. viatical settlement provider

D. viatical settlement provider

If a policyowner does not pay the premium by the due date, the A. insurance company cancels the policy B. policyowner is automatically assessed a late charge C. policyowner can make the premium payment during the grace period D. policy must be reinstated

C. policyowner can make the premium payment during the grace period

When is it acceptable to share commissions with another agent? A. it is never acceptable B. as long as both agents work for the same insurance company C. as long as both agents are licensed in the same state D. as long as both agents are licensed for the same lines of insurance

D. as long as both agents are licensed for the same lines of insurance

Which department oversees 'Market Conduct Examinations' in Florida? A. Office of Financial Regulation B. Department of Markets C. Department of Revenue D. Office of Insurance Regulation

D. Office of Insurance Regulation

A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination? A. 14 days B. 45 days C. 60 days D. 31 days

D. 31 days

A life insurance policy's grace period entitles the insured a period of no less than ___ days to make the premium payment. A. 35 B. 30 C. 25 D. 40

B. 30

A life policy loan in Florida cannot charge a fixed rate of interest higher than A. 10% B. 9% C. 8% D. 7%

A. 10%

A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time? A. 36 months B. 24 months C. 48 months D. 12 months

C. 48 months

A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n) A. Registered Managing Agent (RMA) B. accredited agent C. Certified Variable Dealer (CVD) D. broker dealer

D. broker dealer

A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast? A. Stock company is considered an authorized insurer. Mutual company is considered an unauthorized insurer. B. Stock company is owned by its shareholders. Mutual company is owned by its policyholders. C. Stock company is regulated by the state where it's incorporated. Mutual company is regulated by its policyholders. D. Stock company is owned by its policyholders. Mutual company is owned by its shareholders.

B. Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

According to Florida law, a Group Life insurance policy requires a minimum of how many insureds? A. 25 B. 2 C. No minimum D. 100

C. No minimum

According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase? A. Financial objectives B. Annual income C. Age D. Marital status

D. Marital status

Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer? A. Rebating B. Coercion C. Misrepresentation D. Sliding

C. Misrepresentation

In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the A. Florida Solicitation Law B. Existing Coverage Statute C. Gramm-Leach-Bliley Act D. Florida Replacement Rule

D. Florida Replacement Rule

Who does an agent represent during the solicitation of insurance? A. The client B. The insurance company C. The State of Florida D. The Department of Financial Services

B. The insurance company

According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age A. 69 or older B. 64 years or older C. 59 1/2 or older D. 21 and under

B. 64 years or older

According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with A. a Written Comparison and Policy Summary B. a Buyer's Guide and Policy Summary C. a Certificate of Coverage and Buyer's Guide D. a Summary Statement and Buyer's Guide

B. a Buyer's Guide and Policy Summary

An individual covered under a Group Life insurance policy is considered to be a(n) A. policyowner B. annuitant C. contingent D. certificate holder

D. certificate holder

In Florida, which of the following is considered an Unfair Trade Practice? A. Aleatory B. Coercion C. Replacement D. Subrogation

B. Coercion

All of the following will result in the suspension of an agent's license EXCEPT A. forging a name on an insurance application B. being convicted of a felony C. acting with fiduciary responsibility D. intentionally misrepresenting the provisions of a policy

C. acting with fiduciary responsibility

Group Life policies in Florida are required to contain a conversion privilege that allows for conversion A. with evidence of insurability B. only if the premiums are paid by the employer C. to an individual policy for a stated period of time D. to an individual policy at anytime

C. to an individual policy for a stated period of time

In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom? A. The state where they are conducting business B. The attorney general in the state where they are domiciled C. The National Association of Insurance Commissioners (NAIC) D. Homeland Security

A. The state where they are conducting business

If an agent would like to sell Variable annuities, which state examination must the agent pass? A. Life and Variable contracts B. Life insurance C. Variable annuities D. Accident and Health insurance

A. Life and Variable contracts

In Florida, most life insurance policies have a contestability period of A. 1 year B. 3 years C. 2 years D. 4 years

C. 2 years

In Florida, which employee is eligible for an employer's group term life plan? A. Full time employee not actively at work B. Employee who works more than 40 hours per week C. Employee who works seasonally during the summer D. Employee who works part-time

B. Employee who works more than 40 hours per week

K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take? A. Pay monetary restitution to the client B. Sell the client a more appropriate annuity C. Provide a written apology letter D. Pay a penalty of three times the client's loss

A. Pay monetary restitution to the client

Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called A. Unauthorized insurers B. Domestic life insurance organizations C. Fraternal life insurance organizations D. Mutual life insurers

C. Fraternal life insurance organizations

The Financial Services Commission may hold hearings A. when approved by the NAIC B. only if there is a complaint filed C. for any reason deemed necessary D. only when a felony is involved

C. for any reason deemed necessary

The insurer must provide a prospective buyer with a(n) A. A.M. Best report B. copy of the application C. actuarial table D. Buyer's Guide and Policy Summary

D. Buyer's Guide and Policy Summary

What is the main reason for regulating the insurance industry? A. Controlling the replacement of existing insurance policies B. Add revenue to Florida's treasury C. Maintain the solvency of insurance companies D. Setting sales quotas for insurers

C. Maintain the solvency of insurance companies

In a Key Employee life insurance policy, the third-party owner can be all of the following, EXCEPT: A. Payor B. Owner C. Applicant D. Insured

D. Insured

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? A. Each partner owns a $500,000 policy on their own life B. Each partner owns a $1,000,000 policy on their partner's life C. Each partner owns a $500,000 policy on their partner's life D. Each partner owns a $1,000,000 policy on their own life

C. Each partner owns a $500,000 policy on their partner's life

Which of these factors does NOT influence an applicant's need for life insurance? A. Number of dependents B. Future educational costs of the dependents C. Lifestyle of the applicant D. Self-maintenance expenses

D. Self-maintenance expenses

Which of these is NOT a reason for a business to buy key person life insurance? A. The reduction in sales as a direct result from death of the key employee B. The loss of company revenues while a replacement is being sought C. A pension deficiency if the key employee dies D.A void in leadership if the key person were to die

C. A pension deficiency if the key employee dies

Which statement regarding third-party ownership of a life insurance policy is true? A. It is illegal in most states B. It is used extensively in estate-planning as well as business circumstances C. Policy cannot be assigned once issued D. Beneficiary is required to be irrevocable

B. It is used extensively in estate-planning as well as business circumstances

What is the excise tax rate the IRS imposes on individuals age 73 or older who do not take the required minimum distributions from their qualified retirement plan? A. 35% B. 25% C. 50% D. 10%

B. 25%

What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? A. 250 B. 25 C. 100 D. 50

C. 100

When does a life insurance contract become effective if the initial premium is not collected during the application process? A. After all medical and personal information has been evaluated B. When insurer receives initial premium from the producer C. After application has been approved by the underwriters D. When producer delivers policy and collects initial premium

D. When producer delivers policy and collects initial premium

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? A. Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashier's check back to the insurance company B. Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company C. Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company D. Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account

B. Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

All are true statements regarding the underwriting process, EXCEPT: A. AIDS and HIV virus exams can be conducted in a discriminatory fashion B. Signed consent from the applicant must be provided in order to test for AIDS and HIV virus C. The cost of any examination is paid for by the insurer D. The original application is the primary source of information used in the underwriting process

A. AIDS and HIV virus exams can be conducted in a discriminatory fashion

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a: A. salary reduction plan B. 403(b) plan C. rollover plan D. profit-sharing plan

D. profit-sharing plan

One becomes eligible for Social Security disability benefits after having been disabled for: A. 3 months B. 6 months C.12 months D.5 months

D.5 months

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and A. the initial premium B. a Medical Information Report C. forward it immediately to the insurer D. Attending Physician Statement

A. the initial premium

In a qualified retirement plan, the yearly contributions to an employee's account: A. are restricted to minimum levels set by the IRS B. are not tax-deductible C. are restricted to maximum levels set by the IRS D. must be matched dollar-for-dollar by the employer

C. are restricted to maximum levels set by the IRS

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? A. 20-year paid up policy B.Modified whole life C. Endowment D. Decreasing term

D. Decreasing term

Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation? A. Fair Credit Reporting Act B. USA Patriot Act C. Dodd-Frank Act D. Federal Reserve Act

B. USA Patriot Act

Which of these statements describe a Modified Endowment Contract (MEC)? A. Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract B. Falls below the minimum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract C. The 7-pay test is used to determine the maximum death benefit of the policy D. The 7-pay test is used to determine the minimum death benefit of the policy

A. Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

What type of life insurance are credit policies issued as? A. Universal B. Variable C. Term D. Whole

C. Term

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to file for Social Security disability benefits? A. 3 B. 5 C. 6 D. 4

B. 5

Which of these do NOT constitute policy delivery? A. Policy mailed to agent B. Policy issued with a rating C. Policy mailed to applicant D. Policy delivered to the applicant by the agent

B. Policy issued with a rating

A(n) __________ term life policy is normally used when covering an insured's mortgage balance. A. level B. decreasing C. variable D. increasing

B. decreasing

Which of these is NOT a source of funding for Social Security benefits? A. Federal Government B. Employers C. Employees D. Self employed individuals

A. Federal Government

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for: A. Modified Whole Life B. Universal Variable life C. Variable Annuity D. Variable Life

A. Modified Whole Life

When a life insurance policy exceeds certain IRS table values, the result would create which of the following? A. Modified Endowment Contract (MEC) B. An investment C. 1035 Exchange D. Endowment

A. Modified Endowment Contract (MEC)

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? A. The employee B. The 403(b) custodian C. The financial institution D. The employer

A. The employee

When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? A. Takes into account the present value of future income earned by the breadwinner B. Places a dollar value on the life of the individual C. Establishes the investment risk level acceptable to the individual D. Establishes the needs of the individual and his dependents

D. Establishes the needs of the individual and his dependents

Which of these characteristics is consistent with a Straight Life policy? A. Owner can adjust both premium and death benefit B. Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract C. Owner has the option of converting to term insurance D. Premiums are payable for as long as there is insurance coverage in force

D. Premiums are payable for as long as there is insurance coverage in force

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? A. Cash value plus interest B. Return of premiums paid C. $20,000 death benefit D. Face amount plus interest

C. $20,000 death benefit

Which of these Nonforfeiture Options continue a build-up of cash value? A. Reduced Paid-Up B. Extended Term C. Cash Surrender D. Waiver of Premium

A. Reduced Paid-Up

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? A. Warranty receipt B. Backdated receipt C. Binding receipt D. Conditional receipt

D. Conditional receipt

Which of these provisions require proof of insurability after a policy has lapsed? A. Insuring B. Reinstatement C. Conversion D. Consideration

B. Reinstatement

All of these statements about the Waiver of Premium provision are correct, EXCEPT: A. Insured must be eligible for Social Security disability for claim to be accepted B. Insured must be totally disabled to qualify C. A waiting period must pass before becoming eligible for benefits D. Waiver of Premium is available on both permanent and term insurance policies

A. Insured must be eligible for Social Security disability for claim to be accepted

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? A. 15-Jan B. 8-Jan C. 26-Jan D. 14-Jan

C. 26-Jan

Which of these is NOT a reason for purchasing life insurance on the life of a minor? A. Provides child with insurance now, in case the child becomes uninsurable later B. If both parents were to die, it would provide death benefits to the child C. Provides funds for final expenses if the child were to die D. Provides living benefits for the child's college education

B. If both parents were to die, it would provide death benefits to the child

Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? A. Universal life B. Variable life C. Variable universal life D. Adjustable life

C. Variable universal life

All of these are considered sources of underwriting information about an applicant, EXCEPT: A. Credit Report B. Rating Services C. Inspection Report D. Medical Information Bureau

B. Rating Services

Whose life is covered on a life insurance policy that contains a payor benefit clause? A. Spouse B. Beneficiary C. Parent D. Child

D. Child

An insurer may normally delay the payment of a cash value loan or surrender value for up to A. 8 months B. 2 months C. 4 months D. 6 months

D. 6 months

How does a typical Variable Life Policy investment account grow? A. Tied to price of gold B. Tied to Treasury Bills C. Through mutual funds, stocks, bonds D. Based on returns from insurer's general account

C. Through mutual funds, stocks, bonds

A Nonforfeiture clause gives the policyowner A. guaranteed values even if the policy has lapsed B. unemployment benefits C. cost of living allowances D. lifetime income

A. guaranteed values even if the policy has lapsed

A Cost of Living rider gives the insured A. tax incentives B. decreasing premiums C. monthly income D. additional death benefits

D. additional death benefits

Term insurance has which of the following characteristics? A. Endows at the end of the policy period B. Expires at the end of the policy period C. Has nonforfeiture options D. Builds cash value

B. Expires at the end of the policy period

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A. MIB report B. Inspection report C. Attending physician's report D. Agent's report

B. Inspection report

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has: A. assigned the risk to a reinsurer B. committed an act of fraud C. waived one of its legal rights D. issued a voidable policy

C. waived one of its legal rights

What action should a producer take if the initial premium is NOT submitted with the application? A. Forward the application to the insurer after giving the applicant a binding receipt B. Keep the application until premium is paid C. Forward the application to the insurer after giving the applicant a conditional receipt D. Forward the application to the insurer without the initial premium

D. Forward the application to the insurer without the initial premium

Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? A. All proceeds are income tax free in the year they are received B. The proceeds are taxable only if the beneficiary's tax bracket has changed from the payout C. All proceeds are considered taxable income in the year they are received D. The proceeds which exceed the amount paid in premiums are taxable

A. All proceeds are income tax free in the year they are received

Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary? A. The applicant chose an annual premium mode B. The initial premium was NOT submitted with the application C. The initial premium was submitted with the application D. The applicant is suspected of making a material misrepresentation

C. The initial premium was submitted with the application

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? A. Refund of premiums paid plus interest B. The full face amount C. Double the face amount because cause of death was accidental D. Nothing, due to actively serving in the armed forces

B. The full face amount

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? A. C is the policyowner, the insured, and the beneficiary B. ABC is the policyowner, C is the insured, and her husband is the beneficiary C. ABC is the policyowner, C is the insured, and ABC is the beneficiary D. C is the policyowner and the insured, and ABC is the beneficiary

C. ABC is the policyowner, C is the insured, and ABC is the beneficiary

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? A. 30% B. 10% C. 20% D. None

D. None

Which of these is NOT an element of Life insurance premiums? A. Insurer's expenses B. Morbidity rate C. Mortality rate D. Interest credit

B. Morbidity rate

Who has the option to renew a Renewable Term policy? A. Insured B. Beneficiary C. Agent D. Agency

A. Insured

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? A. One policy is owned by the company and premiums are split equally among the partners B. Each partner must own a policy on the other partners C. Each partner owns their own individual policy D. One policy is owned and paid for by the company

B. Each partner must own a policy on the other partners

K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT A. K's wife dies at age 60 B. A child dies at age 15 C. A child dies at age 18 D. K's wife dies at age 66

D. K's wife dies at age 66

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? A. Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company B. Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company C. Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company D. Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

D. Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

An incomplete life insurance application submitted to an insurer will result in which of these actions? A. Application will be automatically declined B. Application will be approved with restrictions C. Application will be returned to the writing agent D. Application will be pending until a MIB report is sent to the insurer

C. Application will be returned to the writing agent

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT: A. Fixed Period B. Fixed Amount C. Interest Only D. Life Income

C. Interest Only

A 15-year mortgage is best protected by what kind of life policy? A. Modified whole life B.15-year decreasing term C.15-year level term D. Adjustable life

B.15-year decreasing term

Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement? A. 12 B. 1 C. 3 D. 6

D. 6

Who is NOT required to sign a life insurance application? A. Adult insured B. Beneficiary C. Agent D. Policyowner

B. Beneficiary

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? A. Universal Life B. Annuity C. Interest-sensitive Life D. Variable Life

B. Annuity

A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n) A. Variable Universal Life policy B. Joint Life policy C. Universal Life policy D. Endowment

A. Variable Universal Life policy

A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT A. Change the policy's interest rate B. Cancel policy C. Borrow against cash value D. Change beneficiary

A. Change the policy's interest rate

Which of these actions should a producer take when submitting an insurance application to an insurer? A. Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer B. Disclose to the applicant the amount of commissions to be earned on this transaction C. Inform insurer of relevant information not included on the application D. Issue a binding receipt to applicant if no initial premium is submitted

C. Inform insurer of relevant information not included on the application

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will: A. deny the claim B. adjust the death benefit to an increased amount C. pay the death benefit in full D. adjust the death benefit to a reduced amount

D. adjust the death benefit to a reduced amount

Under a Graded Premium Whole Life policy, A. the premium decreases each year during the early years of the contract and remains the same after that time B. the premium always remains the same while the death benefit increases during the early years C. the premium can be adjusted by the policyowner at anytime D. the premium increases each year during the early years of the contract and remains the same after that time

D. the premium increases each year during the early years of the contract and remains the same after that time

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take? A. Subtract past due premium from cash value B. Collect premium from M's estate C. Deny the claim D. Pay face amount minus the past due premium

D. Pay face amount minus the past due premium

A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as: A. Variable Life B. Graded-Premium Life C. Adjustable Life D. Modified Whole Life

A. Variable Life

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured: A. becomes chronically ill B. becomes critically ill C. is blinded in an accident D. dies of natural causes

C. is blinded in an accident

Which of the following consists of an offer, acceptance, and consideration? A. Warranty B. Estoppel C. Representation D. Contract

D. Contract

A Limited-Pay Life policy has: A. premium payments limited to a specified number of years B. graded death benefits premium payments that are paid to age C.100 D. no cash value

A. premium payments limited to a specified number of years

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? A. Life Income B. Fixed Period C. Interest Only D. Fixed Amount

A. Life Income

Which of the following best describes a contingent beneficiary? A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured B. Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies C. Person designated by the primary beneficiary's executor to receive policy proceeds D. Person designated by the insurance company to receive policy proceeds in the event that the primary beneficiary dies

A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

Before a life policy is issued, which of these contract elements is necessary? A. A binding receipt B. A minimum amount of coverage C. A beneficiary's signature on an application D. A signed application by the prospect

D. A signed application by the prospect

A term life insurance policy matures: A. upon the endowment of the contract B. upon the insured's death during the term of the policy C. When the cash value equals the death benefit D. upon death of the insured

B. upon the insured's death during the term of the policy

How are policyowner dividends treated in regards to income tax? A. Dividends are not taxable B. Taxed as ordinary income C. Taxed as capital gains D. Interest on accumulations is taxed

D. interest on accumulations is taxed

A sole proprietor may use this plan ONLY if the employees of this business are included. A. Individual Retirement Account (IRA) B. SEP Plan C. Keogh Pension Plan D. SIMPLE Plan

C. Keogh Pension Plan

The part of a life insurance policy guaranteed to be true is called a(n): A. representation B. warranty C. waiver D. exclusion

B. Warranty

Which of the following actions requires a policy owner to provide proof of insurability in an Adjustable Life policy? A. decrease face amount B. increase face amount C. decrease premium payment D. increase premium-paying period

B. Increase face amount

What benefit does the Payor clause on a Juvenile Life policy provide? A. What benefit does the Payor clause on a Juvenile Life policy provide? B. Allows payor to increase face amount without providing evidence of insurability C. Allows payor to assign ownership in the event payor becomes disabled D. Premiums are waived if juvenile becomes disabled

A. What benefit does the Payor clause on a Juvenile Life policy provide?

A Term Life rider offers the insured A. disability protection B. long-term care coverage C. cash value D. additional life coverage

D. additional life coverage

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? A. Family Maintenance Policy B. Family Survivor Policy C. Family Lump Sum Policy D. Family Income Policy

A. Family Maintenance Policy

Credit Life insurance is: A. issued in any amount at the discretion of the applicant B. coverage that waives the premiums on a loan payment in the event of total disability C. issued in an amount not to exceed the amount of the loan D. used in the event of loss of income

C. issued in an amount not to exceed the amount of the loan

Which statement regarding the Change of Beneficiary provision is true? A. A beneficiary change is subject to underwriting procedures B. The beneficiary can only be changed with the consent of the insurer C. The insured can change the beneficiary D. The policyowner can change the beneficiary

D. The policyowner can change the beneficiary

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? A.Revocable B.Tertiary C. Contingent D. Irrevocable

A.Revocable

A policyowner is able to choose the frequency of premium payments through what policy feature? A. Assignment provision B. Premium Mode C. Payor benefit D. Consideration

B. Premium mode

Which of the following statements is CORRECT about accelerated death benefits? A. Must have a terminal illness to qualify B. This provision is usually provided with an increase in premium C. The full face amount is available as an accelerated benefit D. Those on Social Security disability automatically qualify for this benefit

A. Must have a terminal illness to qualify

The __________ has the right to change a life insurance policy's beneficiary. A. beneficiary B. policyowner C. insurer D. insured

B. policyowner

All of these are characteristics of an Adjustable Life policy, EXCEPT: A. combination of term and whole life insurance B. adjustable premium payment period C. adjustable premiums D. face amount can be adjusted using policy dividends

D. face amount can be adjusted using policy dividends

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? A. Whole life policy B. Decreasing term policy C. Limited-pay policy D. Level term policy

B. Decreasing term policy

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? A. The account can be rolled into the surviving spouse's IRA B. Distributions will be received tax-free if surviving spouse is over age 59 1/2 C. Future distributions are payable to the owner's estate D. Surrender charge is applied

A. The account can be rolled into the surviving spouse's IRA

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? A. Credit Life B. Whole Life C. Term Life D. Universal Life

B. Whole life

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? A. Proceeds will go to the primary beneficiary's estate B. Proceeds will go to the contingent beneficiary C. Probate will decide who receives proceeds D. Proceeds will go to the insured's estate

B. Proceeds will go to the contingent beneficiary

If a 10-Year Term Life policy contains a Renewability provision, the policy will renew A. only with evidence of insurability B. along with a decrease in premium C. without evidence of insurability D.at the option of the insurer

C. without evidence of insurability

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and A. agreeing to a physical examination B. disclosure of any medical conditions C. the initial premium D. delivery of policy

C. the initial premium

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called: A. Reinstatement B. Automatic premium loan C. Waiver of premium D. Grace period

A. Reinstatement

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? A. Proceeds will be paid to P's estate B. The courts will decide who will receive death benefits C. Proceeds will be divided equally between K's and P's estate D. Proceeds will be payable to K's estate if P dies within a specified time

D. Proceeds will be payable to K's estate if P dies within a specified time

An insurance contract is considered a policy of adhesion. This means that the contract can only be modified by _____. A. the applicant B. the insured C. the insurer D. the agent

C. the insurer

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? A. If Tom's employment is terminated, 80% of the funds would be forfeited B. 80% of the funds are invested in a separate account C. 20% of the funds are subject to taxes D. If Tom's employment is terminated, 20% of the funds would be forfeited

D. If Tom's employment is terminated, 20% of the funds would be forfeited

On a life insurance policy, who is qualified to change the beneficiary designation? A. Insurer B. Primary beneficiary C. Policyowner D. Payer

C. policyowner

What is being delivered during a policy delivery? A. A binding receipt to the proposed insured B. Application and initial premium to the insurer C. Policy summary sheet and disclosure material to the proposed insured D. Insurance contract to the proposed insured

D. Insurance contract to the proposed insured

At what point does an informal agreement become a binding contract? A. When one party makes an invitation and the other makes an offer B. When one party makes an offer and the other party accepts that offer C. When an offer is made by one party and the other party rejects the offer and makes a counteroffer D. ,When consideration is provided by one of the parties to the contract

D. When consideration is provided by one of the parties to the contract

What type of life policy covers two people and pays upon the death of the last insured? A. Joint B. Adjustable C. Survivorship D. Shared

C. Survivorship

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? A. Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating B. 20-Pay Life and Straight Life accumulate cash value at the same rate C. 20-Pay Life accumulates cash value faster than Straight Life D. Straight life accumulates faster than Limited-pay Life

C. 20-Pay Life accumulates cash value faster than Straight Life

The Automatic Premium Loan provision is designed to: A. Avoid a policy lapse B. provide a source of revenue to the insurance company C. allow a policyowner to take out additional coverage without evidence of insurability D. allow a policyowner to request a policy loan

A. avoid a policy lapse

What type of policy would offer a 40-year old the quickest accumulation of cash value? A. Straight whole life B. 20-pay life C. Paid-up at 65 D. 30-pay life

B. 20-pay life

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own? A. Modified Life B. Endowment at Age 70 C. Straight Life D. Whole Life Paid-Up at Age 70

B. Endowment at Age 70

What does the ownership clause in a life insurance policy state? A. Ownership cannot be assigned after the incontestable period B. Allows the policyowner to adjust the death benefit and premium amount at anytime C. Who the beneficiary is and what rights the beneficiary is entitled to D. Who the policyowner is and what rights the policyowner is entitled to

D. Who the policyowner is and what rights the policyowner is entitled to

Under a Renewable Term policy, A. a new application must be completed at each renewal B. evidence of insurability must be provided at each renewal C. the face amount is automatically adjusted at the time of renewal D. the renewal premium is calculated on the basis of the insured's attained age

D. the renewal premium is calculated on the basis of the insured's attained age

Which statement regarding the Misstatement of Age provision is considered to be true? A. Requires that a new policy must be applied for if a misstatement of age is found on the current policy B. Insurer may void the policy if a misstatement of age is discovered C. Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered D. Misstatement of Age provision is valid only during the contestable period

C. Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

Which life insurance rider typically appears on a Juvenile life insurance policy? A. Inflation rider B. Decreasing term rider C. Payor Benefit rider D. Waiver of Premium rider

C. Payor Benefit rider

A Medical Information Report (MIB) report may disclose which of the following: A. Prior lapsing of policy B. Prior preferred rating C. Prior use of marijuana D. Prior bankruptcy judgement

C. Prior use of marijuana

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? A. Primary beneficiary's next of kin B. Insured's contingent beneficiary C. Primary beneficiary's estate D. Insured's estate

B. Insured's contingent beneficiary

S is covered by a whole life policy. Which insurance product can cover his children? A. Payor benefit B. Assignment provision C. Child term rider D. Accelerated benefit rider

C. child term rider

What kind of premium does a Whole Life policy have? A. level B.deferred C. decreasing D. adjustable

A. level

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? A. Guaranteed Insurability rider B. Impairment rider C. Aviation exclusion D. Accidental Death Benefit rider

C. Aviation exclusion

Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? A. Competent Parties B. Offer/Acceptance C. Legal Purpose (Insurable Interest) D. Consideration

C. Legal Purpose (Insurable Interest)

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n): A. elimination B. exclusion C. exception D. limitation

B. exclusion

Under an Interest Sensitive Whole Life policy, A. premiums are determined by the policyowner B. the policy normally renews every 10 years C. no cash value ever accrues D. cash values are determined by interest rates

D. cash values are determined by interest rates

Which of the following types of Term Life policies most likely contains a Renewability feature? A. Variable Term B. 10 Year Convertible Term C. Decreasing Term D. Increasing Term

B. 10 Year Convertible Term

____ of personal life insurance premiums is usually deductible for federal income tax purposes. A. 50% B. 75% C. 100% D. 0%

D. 0%

Which of the following is an example of a nonforfeiture option? A. Inflation option B. Reduced Paid-Up option C. Guaranteed insurability option D. Conversion option

B. Reduced Paid-Up option

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? A. Waiver of Premium B. Cost of Living C. Accelerated Benefits D. Return of Premium

A. Waiver of Premium

A level premium indicates: A. the premium stays level until the policy's renewal date B. the premium is fixed for the entire duration of the contract C. the premium can only be changed with the consent of the insurer D. the premium is fixed for a period stated in the contract, then becomes variable

B. the premium is fixed for the entire duration of the contract

Additional coverage can be added to a Whole Life policy by adding a(n): A. automatic premium loan rider B. accelerated benefit rider C. payor rider D. decreasing term rider

D. decreasing term rider

A policyowner is allowed to pay premiums more than once a year under which provision? A. Consideration B. Payor C. Insuring D. Mode of Premium

D. Mode of Premium

A policyowner's rights are limited under which beneficiary designation? A. Contingent B. Tertiary C. Irrevocable D. Revocable

C. Irrevocable

Under a trustee group life policy, who would be eligible for a certificate of coverage? A. Employee B. Corporation C. Labor union D. Employer

A. Employee

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? A. The dissolved partnership B. E's family C. E's estate D. F

D. F

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: A. consideration B. warranties C. representations D. guarantees

C. Representations

If a corporation pays the premium on a group life policy for its employees, the corporation is required to report how much additional taxable income for each employee? A. Nothing B. The annual premium divided by the number of employees C. Half the premium paid in a year D. The entire premium paid in a year

A. Nothing

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? A. Eligible B. Noncontributory C. Contributory D. Noneligible

C. Contributory

A(n) ________ annuity pays benefits based on units rather than stated dollar amounts. A. Deferred B. Immediate C. Variable D. Unit

C. variable

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? A. Fixed Variable B. Fixed Immediate C. Fixed Period D. Fixed Deferred

D. Fixed Deferred

Which of these is considered a statement that is assured to be true in every respect? A. Warranty B. Guarantee C. Estoppel D. Representation

A. Warranty

An immediate annuity consists of a: A. single premium B. variable premium C. deferred premium D. flexible premium

A. single premium

An individual who purchases a Life annuity is given protection against: A. the risk of living longer than expected B. the risk of not having enough retirement income C. inflation D. the risk of dying prematurely

A. the risk of living longer than expected

A noncontributory group term life plan is characterized by: A. the entire cost of the plan is paid for by the employer B. the cost of the plan is shared by both employer and employee C. the entire cost of the plan is paid for by the employee D. both employer and employee must provide evidence of insurability

A. the entire cost of the plan is paid for by the employer

All individuals covered under a group contract will receive a(n) A. master policy B. individual policy C. receipt of coverage D. certificate

D. certificate

Which type of contract liquidates an estate through recurrent payments? A. 401(k) B. Annuity C. Universal life insurance D. Whole life insurance

B. Annuity

Which of the following are Equity Indexed annuities typically invested in? A. Municipal Bonds B. Corporate Bonds C. S&P 500 D. Money Market accounts

C. S&P 500

Which of these statements concerning an Individual Straight Life annuity is accurate? A. Payments are made to an annuitant for life B. Only available to employees of nonprofit charitable, educational, and religious organizations C. Life expectancy of the annuitant is not a factor D. The payments are received tax-free

A. Payments are made to an annuitant for life

Which requirement must be met for an association to be eligible for a group life plan? A. Group was formed for the purpose of acquiring insurance B. Group was formed for a purpose other than acquiring insurance C. Group must have at least 10 members D. Group must establish a President

B. Group was formed for a purpose other than acquiring insurance

What is the basic function of an annuity? A. The guarantee of a specific sum of money to a designated beneficiary upon the death of the insured B. The protection against loss of income due to partial or total disability C. The systematic liquidation of accumulated funds D. The accumulation of funds to pay for life insurance premiums during retirement years

C. The systematic liquidation of accumulated funds

200Q Flashcards

study all of them (200 cards)